Market Monitor, Tuesday, 04/29/2008

The small down day on Tuesday, for the DOW and SPX, could be considered as confirmation of the bearish reversal candles left on Monday but with NDX holding up and the trading range being so small I think we just have to wait for more price action to see what this market has in mind. The daily DOW chart shows price still up near trend line resistance but threatening to break down: Link

The 60-min chart shows how price has held onto the bottom of its small rising wedge from the April 22nd low and there remains the possibility for another push back up to the top of the wedge near 13K: Link
. This could be especially true if there is bullish sentiment towards where the market is headed once we get past FOMC. The ISEE call/put ratio says bulls need to be very careful about that expectation but we'll see how it sets up by Wednesday afternoon.

Jeff Bailey : 4/29/2008 10:57:21 PM

Session low just after the open on Visa (V) was $71.00.

OI Technical Staff : 4/29/2008 9:59:59 PM

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Citigroup (update) Citi today announced it has commenced an offering of approximately $3 billion of common stock. Citi expects the offering to include an over-allotment option to purchase additional shares of common stock. The offering is being conducted as a public offering registered under the Securities Act of 1933. On a pro forma basis, after giving effect to Citi's recent issuance of $6 billion of preferred stock and an assumed issuance of $3 billion of common stock in this offering, as of March 31, 2008, Citi's Tier One capital ratio would have been approximately 8.5%. "We are issuing common equity at this time as we continue to optimize our capital structure," said Gary Crittenden, Chief Financial Officer of Citi. "We're pleased with the strong interest we have already received regarding this issuance." Citi Markets & Banking is serving as sole book-running manager of this offering. Citi, the leading global financial services company, has some 200 million customer accounts and does business in more than 100 countries, providing consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Citi's major brand names include Citibank, CitiFinancial, Primerica, Smith Barney, Banamex and Nikko. Additional information may be found at or . Certain statements in this document are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. More information about these factors is contained in Citi's filings with the Securities and Exchange Commission. Citi has filed a registration statement (including a prospectus) with the Securities and Exchange Commission for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and the other documents Citi has filed with the SEC for more complete information about Citi and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at . The file number for Citi's registration statement is No. 333-132177. Alternatively, you can request the prospectus by calling toll-free in the United States 1-877-858-5407.

As far as I'm concerned, nothing was decided today. We didn't get a confirmation of a potential reversal signal by a strong down day. The SPX consolidated another day between potentially strong support near 1378-1382 and potentially strong resistance in a band from 1407-1417.

Linda Piazza : 4/29/2008 3:52:09 PM

Next potential Keltner support at 1389.03-1390.85 on 15-minute closes for the SPX. The OEX is stronger today. It's got light support at 643.01. Next support is 641.31-642.08.

Linda Piazza : 4/29/2008 3:45:35 PM

We're getting the small-bodied, indecision-type candle for today on the daily chart. As long as the daily close isn't below the 10-sma, now at 1384.03, no real damage is done on the daily chart, although it certainly could have been done to your trading account. As long as daily closes are above that average, the potential for a climb toward 1407-1417 remains, although it isn't a given. At all. However, a daily close beneath that 10-sma suggests the SPX might have to probe deeper support, perhaps as low as 1368 or even 1358. Of course, that's in advance of the developments tomorrow and those developments could change everything, in either direction.

James Brown : 4/29/2008 3:44:10 PM

Oppenheimer commentator suggesting this is just a temporary rally in the U.S. dollar and that we won't see a sustained dollar rally until the Fed starts to actually tighten, which is months away.

Linda Piazza : 4/29/2008 3:40:44 PM

Here comes the crazy action as traders position their portfolios ahead of tomorrow's open. If you haven't made end-of-day decisions, it's time to do so. People vary in the way they approach something like an important economic number such as the GDP and tomorrow's Fed decision. Some open trades if their signals are hit and don't exit unless their stops or profit limits are and some stop trading around such developments, preferring to wait until the dust settles. There's no right or wrong way to do it. Each has its risks and potential awards. However, know whether you can sleep at night if you don't exit or limit your overnight risk or trust yourself to exit if things go very wrong tomorrow before you make any decision about holding overnight.

James Brown : 4/29/2008 3:40:23 PM

For the second time today I have heard or read comments on how we're in the "sixth inning" of corporate loan losses and only the "third inning" of the sub-prime mess.

Another commentator suggesting we won't "feel" like we're in a recession until 2009.

There has been a pretty strong and growing camp of opinion that this recession would be longer and deeper than normal. Of course that was before stocks started turning higher in the last two or three weeks.

Linda Piazza : 4/29/2008 3:36:04 PM

Tomorrow morning, we will have a number of important releases before the market opens, including GDP and ADP's take on the employment numbers. What happens before that? Japan has a number of important figures tonight, including April's Manufacturing PMI and March's Unemployment, Household Spending, Industrial Production and Housing Starts, all appearing from 7:15 pm ET tonight until 1:00 am in the night. At 2:00, the U.K. gets an important read on its housing situation in the April Nationwide Housing Plans. Germany gets a read on unemployment at 4:00, the whole Eurozone does at 5:00, as well as getting a host of figures on economic and consumer sentiment.

James Brown : 4/29/2008 3:35:55 PM

Story out this afternoon... the CEO of Fannie Mae (FNM) says he doesn't see the housing market rebounding until 2010.

Potential support on 15-minute closes is now at 1393.60, the same Keltner zone that was the benchmark I was watching earlier. A drop to 1389.40-1391.30 might be possible here if that zone now fails to provide support on 15-minute closes.

I'm not sure what to expect right now with the SPX as this move, this climb, leans the day's expectations a little closer toward the choppy/indecision scenario. In fact, if you take a look at the daily chart, you see that we've arrived at the doji candle for the day with this current action. Anything seems possible from here. Although it's not my best-guess expectation that we'll see a strong gain for the day, that's not impossible. If there are further gains, however, I'd expect them to produce no more than a small-bodied candle by the end of the day. In other words, if a gain gets too big, my best guess is that there would be some selling to bring prices back down. Be careful, then, if you're trading the upside. A decline that gets too big could gain momentum, but I'd think it might be harder to do that to the upside.

Remember my caution earlier about trying not to build too many expectations in from this point on about what might happen, including putting too much faith in what I'm saying, either. This is the point at which chart setups may not be as helpful as they usually are.

Jeff Bailey : 4/29/2008 3:09:44 PM

Eur/$ 1.5563 -0.60% ...

Jeff Bailey : 4/29/2008 3:08:18 PM

September Copper (hg08u) $3.86 -1.27% ...

Jeff Bailey : 4/29/2008 3:07:08 PM

Swing trade put alert! ... for two (2) of the Companhia Vale Do Rio Doce RIO Sep $35.00 Puts (RIO-UG) at the offer of $2.89.

RIO $37.02 -2.63% ...

Linda Piazza : 4/29/2008 3:05:45 PM

The A/D line is far from making a new daily high yet. While that doesn't have the same strong correlation as the SPX new high vs. VIX new low that Jane just mentioned, it's worth watching the A/D line as it approaches its previous high of the day at +14 and possibly strong Keltner resistance on 15-minute closes at -245 and then -23. Just either side of the flat-line level will be an important resistance zone for the A/D line, then, but first it has to get past the zone at -245 and it hasn't done that. A/D line at -322 as I type.

Jane Fox : 4/29/2008 3:02:52 PM

As the S&P futures (ES) head up to test its daily highs the VIX is heading down to test its daily lows. if ES makes a new daily high but the VIX does not make a new daily low then you there is a high probably the new highs will not carry through to higher highs. Link

Google (GOOG) is also hitting new relative highs, up 1.8% to $562, nearing its 200-dma.

Linda Piazza : 4/29/2008 2:56:36 PM

The VIX is just testing the previous low of the day, at 19.94. As I type, it's 19.95. when it tested this level earlier, it bounced back above the Keltner support (currently 20.00) before the end of the 15-minute period. Will it do so again?

The weekly chart clearly shows the broken bullish trend. However, short-term the commodity looks a little oversold and trading near potential support at $86.00 in the GLD etf. chart: Link

Linda Piazza : 4/29/2008 2:49:33 PM

Another strong push higher and this one to a new high for the afternoon although not quite for the day yet. If this is to be a doji or indecision-type day, this action isn't unexpected, and that was one of the two scenarios for the day. Next potential resistance on 15-minute closes beyond the 1395.90-1396.55-ish resistance currently being tested is way up at 1402.01. Try not to draw too many conclusions.

Jim Brown : 4/29/2008 2:49:22 PM

Gold - Now hitting the low for the day -$22 at $874

Jim Brown : 4/29/2008 2:30:29 PM

Crude Oil - Looks like we are set to end with a $3 loss for the day. The "reason" has been given as the end to the strike in Scotland. The strike shutdown the 700,000 bpd Forties pipeline. Unfortunately they claim it could take several weeks to restart everything. The refinery in question that supplies power and steam to the pipeline has been running continuous for 75 years. It has not been shutdown since World War II. Analysts say restarting it and the pipeline system could take weeks. Of course the market runs on headlines and not reality.

Linda Piazza : 4/29/2008 2:26:54 PM

The SPX's 15-minute 9-ema at 1392.26 is so far holding as support on 15-minute closes. The 15-minute 45-ema, now at about 1393.40 is also holding as resistance. One or the other has got to break.

Linda Piazza : 4/29/2008 2:19:45 PM

If the currently being tested 1391.85-ish support on the SPX is lost on 15-minute closes, next potentially strong support for the SPX on 15-minute closes is at about 1389.40. I wouldn't be surprised to see it tested.

So far the bounce off this morning's low for SPX looks like a correction of the decline from yesterday. That suggests another leg down which could result in selling into the close. But the techs could hold things up and create more of a choppy consolidation for the rest of the day. I'd be leaning short but reluctant to risk much.

I've got to leave for the rest of the day so I'll check back in later this evening.

Linda Piazza : 4/29/2008 1:57:31 PM

The SPX closed that last 15-minute period just above the benchmark I was watching but was already pulling back at the time and is now back below that benchmark. I don't think we can assume that the test was successful. Sellers (see my 1:46:40 post) were waiting. Now we see whether buyers are.

See CAT near the bottom (4/17/08). That was its 5th buy signal. Its reversing higher (or first buy signal) came back in February at $73. Once a stock gives a buy signal, for the bullish %, it won't keep adding to the bullish % each time it gives additional buy signals.

Same for a sell signal. Only the reversing, or first sell signal will take away from the bullish %.

Linda Piazza : 4/29/2008 1:46:40 PM

Right on time during the typical stop-running time of day from 1:35-1:55 pm ET, the indices push up to test resistance. The thing about knowing about the time period is that you can tell what's going on. We might call it a stop-running time of day because it's our stops being run oftentimes and it feels deliberately aimed toward them. However, what's really happening is that big money is returning from lunch, seeing that support has basically held for several hours, and they're testing the water. Before they plunk much money down, they want to see if sellers are waiting up above. It's a test and a legitimate one, even if it disgruntles us and costs us money. So, we don't yet know the outcome of that test. Be aware that if sellers show up in force, the test will warn big money and then they may turn around and drive prices lower, testing support to see if that's met with buying. I'm using a level at about 1393.40 as my benchmark. Sustained 15-minute closes above that will suggest that not too many sellers were waiting, while a brief pop above it and then a drop back below it suggests that resistance held and too many sellers were waiting. It's a very short-term benchmark and it's not fail safe, but it's what I'm watching for now. "Sustained" is a key word in that scenario, however, remembering that one of my scenarios for the day is a choppy consolidation or indecision-type day.

Jeff Bailey : 4/29/2008 1:39:42 PM

Bank of New York (BK) $44.12 -0.65% Link ... more of a "custodial bank" or record keeper.

Scotland is serious about developing alternative energy sources. According to Inhabitat, the government has announced the Saltire Prize of $20 million for the person or team whose innovations in marine renewable energy technology the government puts to work in Scotland. The ezine compares this contest to Richard Branson's Virgin Earth Challenge to find ways to remove CO2 from the atmosphere and the Ansari X Prize that led to the first launch of a private spacecraft. The article also notes that Scotland is positioned to generate a quarter of the Europe's wind energy, a quarter of Europe's tidal power and 10% of its wave power. The country wants to generate half of their own electricity demands through renewable energy by 2020, but Korea is already ahead of them in the development of a tidal power plant.

Only pays a $0.15/share dividend per year at this point, so good chart (matches Dorsey's).

Jane Fox : 4/29/2008 1:27:14 PM

The DOW has already broken its resistance and the reverse head and shoulders neckline however it still needs to break above 13000 something it has not done since January 4th. Link

Jeff Bailey : 4/29/2008 1:27:18 PM

JP Morgan (JPM) $47.21 -0.27% Link ... was another OEX component, and a INDU/DIA/YM for that matter.

Not the "volatility" depicted by the number of columns of X and O last year, and so far this year. Volatility picks up when compared to 2004, 2005 and 2006 as stock was more of a trender.

PINK circles are alternating reversing higher, then low PnF signals that would have attributed + then - to a bullish %. That type of chop suggests great uncertainty, don't buy, or sell the signals at this point.

The VIX is dropping a little deeper than equity bears would prefer. It's dropped to test the resistance that stopped it since 4/23, the resistance it finally broke through earlier today. Bears would have preferred that the pullback find support at the Keltner support now at 20.29 or at the 9-ema, now at 20.20, but instead it's now 20.07, sitting right on that other level of support, a presumably stronger level. Further potential support layers down to 19.98, and the equity bears really want to see the VIX maintain that on 15-minute closes.

Jane Fox : 4/29/2008 1:24:31 PM

Investors response to the FED announcement tomorrow will ultimately dictate where the SPX will trade on Wednesday, but I see a good chance of a breakout above resistance. The SPX has traded very close to its resistance for days now and on Monday traded all the way to 1402.

Linda Piazza : 4/29/2008 1:21:29 PM

The A/D line is also testing its 15-minute 9-ema with that at about -750 and the A/D line now -743. If the A/D line can sustain 15-minute closes above that 9-ema, which it hasn't been able to do yet, it might climb up toward -400 where it might find next resistance. The typical stop-running time of day from 1:35-1:55 pm ET might change the setup, but for now, I'm looking at what might be a bear flag on this A/D line's chart, too.

Jeff Bailey : 4/29/2008 1:05:36 PM

Williams Co. (WMB) $36.68 -3.09% ... was one that gave a reversing higher PnF buy signal at $38. Sector is Util/Gas. Link

The formation off the SPX's low of the day now looks distinctively like a bear flag. If the SPX is able to maintain 15-minute closes above 1393.52, I might have to reassess that judgment, but for now, that's what it looks like to me. Traders should factor in the SPX's possible vulnerability to lower prices. It's not a given, but it's a possibility. If there is a new low that isn't immediately reversed, then I'd be considering a possible drop toward 1381.63 and maybe even a bit lower.

However, cast this chart setup within the context of a consolidation-or-pullback scenario for today, ahead of tomorrow's economic news and FOMC decision. A choppy consolidation day remains possible.

Jeff Bailey : 4/29/2008 12:56:45 PM

Let's run a query of recent buy/sell signals on OEX stocks.

Jeff Bailey : 4/29/2008 12:55:58 PM

S&P 100 Bullish % (BPOEX) ... was going over some of the major market internals yesterday, trying to get caught up. Will note that Dorsey/Wright's BPOEX did see a net gain of four (4) stocks to reversing higher PnF buy signals to 56.00 on chart, 57.00. So, "bull confirmed" and then some.

Up 1.63 M/bbl in last month. Up 2.55 M/bbl for two (2) months. Up 2.98 M/bbl for three (3) months. Up 12.10 M/bbl vs. year ago.

Linda Piazza : 4/29/2008 12:44:45 PM

We've seen a first 15-minute close of the SPX above the 9-ema today. Next resistance now at 1393.66 on 15-minute closes.

Jeff Bailey : 4/29/2008 12:44:06 PM

DJ- 16 US Republican Senators Call for Halt In SPR Additions

Jane Fox : 4/29/2008 12:32:36 PM

Keene my husband and I rented for about 2 years and I know what you are talking about, renting does give you a freedom you do not have with ownership. However, similar to you, we started to feel like at our age it was time to own our own home and did take the plunge and bought in January. Fortunately though, we are one of those areas that did not partake in the bubble so has not had the downward pressure you see in other areas. As a matter of fact our house prices have risen at a steady 5% for the last 10 years. This year the projection is lower than 5% but still a climb over last year so felt the purchase was well worth it since we plan on staying in this house for years.

Linda Piazza : 4/29/2008 12:28:06 PM

No resolution yet to the "will it bounce or is it burning off the short-term oversold status by consolidating sideways before another downturn" for the SPX.

This is setting up to be a perfect spot to take a long in Gold. The market is tagging support but MACD is not. Also the US$ is tagging a resistance zone, and since Gold and the US$ trade opposite to one another, this is bullish for Gold. The last item is you have a very clear spot to put your stop and a very clear area to take profits. Link

James Brown : 4/29/2008 12:21:42 PM

June crude oil recently down $2.66 to $116.09/barrel.

James Brown : 4/29/2008 12:19:41 PM

I did read something suggesting that the U.S. could face a similar crisis to what Japan went through following Japan's real estate bubble bursting. Home prices in Japan declined for more than 20 years following the peak of the bubble.

Keene Little : 4/29/2008 12:19:33 PM

I moved to Seattle about two years ago and I have no intention of buying a home for at least another five years. Renting is Much cheaper than buying a home right now. I always felt renting was pouring money down the drain but we're in one of those rare periods, since about 2006, where it's just the opposite.

But I must admit that after 30+ years of marraige and multiple homes as we raised a family I now feel like we're back to our early years of marraige before saving enough money to buy a home. But in fact it's been a rather freeing experience to call someone to fix something and not have to worry about a yard.

You're not alone, Keene. I read something just recently suggesting this housing problem wouldn't end until we saw another 40% decline. That's just unbelievably painful to consider.

Keene Little : 4/29/2008 12:13:07 PM

James, what's really scary is that home values, especially in the pricier sections of the country, could drop 40%-50% before all is said and done. That would fit historical patterns in the home market after a bubble.

Linda Piazza : 4/29/2008 12:10:10 PM

The SPX's 15-minute 9-ema is now 1390.39; the OEX's, at the SPX's current 642.53.

James Brown : 4/29/2008 12:09:54 PM

Ouch! -- more details on the home numbers...

year over year price declines...

Las Vegas -22.8%
Miami -21.7%
Phoenix -20.8%

Obviously those markets that were the hottest (these were three of the hottest areas during the boom) are seeing the biggest plunges.

James Brown : 4/29/2008 12:07:41 PM

It appears that Rogers Communications Inc. will be the wireless carrier to host Apple's (AAPL) iPhone when the product launches in Canada later this year.

The iPhone is only available in the U.S., U.K., Germany France, Ireland and Austra. (source: marketwatch)

The SPX's 15-minute 9-ema is currently 1390.65. The SPX tested it and it held as resistance, as I suspected it might. We need a new low of the day to confirm that, however, as what might be happening is just a chopping around that potentially significant support near 1389.

Linda Piazza : 4/29/2008 11:55:14 AM

The USDJPY just rose from its low of the day to test an important short-term benchmark (Keltner) at 103.50. It's currently turning back from that benchmark, at 103.39 as I type. It needs a new low of the day to confirm that the resistance held. Otherwise, the USDJPY could just be chopping out a rising value channel. The low of the day has been 103.21.

James Brown : 4/29/2008 11:54:47 AM

Another solar-related stock that just set off one of my alarms is SunPower (SPWR). Shares are dropping 5% and broke down under short-term support near $84.00.

The trading on April 22nd and 23rd looked like a potential top or bearish reversal but the bears have been getting murdered in this stock. It would have been tough to step in front of that train. Now I'm seeing a lot more bearish signals setting up. I'm not seeing a lot of option volume ahead of the report, which is due out tomorrow morning.

If the options weren't so expensive I'd consider a strangle over the earnings report.

Wall Street estimates are for a profit of 47 cents a share.

James Brown : 4/29/2008 11:45:13 AM

Travelzoo (TZ00) is down 8.5% and trading near its 50-dma around $11.20 after reporting earnings today and missing estimates by 15 cents. I don't see what will stop this stock from retesting support near $10.00.

Jane Fox : 4/29/2008 11:44:54 AM

WASHINGTON (MarketWatch) -- Policymakers -- but not the Fed -- need to act quickly to prevent falling home prices from sparking a "ruinous" deflation in asset prices, wrote Bill Gross, managing director of Pimco, in his monthly letter. Further rate cuts from the Federal Reserve would do more damage than good, he said. "The better alternative is to initiate a limited mark-to-market write-down of private mortgage debt as envisioned in the Dodd-Frank congressional proposal combined with government-subsidized loans at below market rates," he said. Pimco manages about $750 billion in assets.

Internals are quite bearish but the bears are taking a little rest here shown by the VIX falling and the AD volume and ratio climbing a tad.
. Link

Linda Piazza : 4/29/2008 11:38:23 AM

The VIX is pulling back toward its own 15-minute 9-ema, which joins other potential Keltner support on 15-minute closes, now near 20.23-20.25. If the VIX continues pulling back, not a given, equity bears want to see this hold as support on 15-minute closes. The VIX is currently 20.42.

James Brown : 4/29/2008 11:37:58 AM

Software maker Adobe Systems (ADBE) is trying to break free from its sideways consolidation. The stock is looking a little bullish here (+1.7% to $37.81) but shares still have potential resistance at the 200-dma near round-number resistance at $40.00. The Point & Figure chart is bullish with a triple-top breakout buy signal and a $50 target.

The company is due to have an analyst day on May 1st.

Jeff Bailey : 4/29/2008 11:33:45 AM

CVX +2.56%, BA +1.07% ...

MRK -9.70%, AA -3.04%, HD -1.81%, GM -1.77%

Keene Little : 4/29/2008 11:32:45 AM

The techs remain relatively strong and that sets us up for a choppy day, which is no real surprise since I've been doubting we'll make a strong move in either direction in front of tomorrow's FOMC.

Jeff Bailey : 4/29/2008 11:32:20 AM

Dow breadth mixed to lower at 10 up, 20 down.

James Brown : 4/29/2008 11:31:37 AM

Banking stocks are struggling to breakout over resistance. Chart: Link

Jeff Bailey : 4/29/2008 11:31:27 AM

DJ (earlier)- FDA'S CHOLESTEROL-DRUG REJECTION A BLOW TO MERCK

Shares fall 8% after the Food and Drug Administration rejects one of the most promising drugs in Merck's development pipeline, cholesterol medicine Cordaptive, delivering a big blow to efforts to reinvigorate the company's turnaround.

It looks like the HMO index is trying to breakout from its sideways trading range but today's rally is reversing... for now.

James Brown : 4/29/2008 11:25:23 AM

I mentioned UNH yesterday. The stock is breaking down under support near $33.00. Next stop could be $30.00.

However, I would keep an eye on the HMO index, which has been showing some relative strength recently.

James Brown : 4/29/2008 11:22:25 AM

Shares of Dow-component Merck (MRK) are down 10.3% to $37.15 (near previous April support at $37.00) following news out last night that the FDA has handed the company a rejection letter for its latest cholesterol drug.

The FDA is asking for additional information on MRK's Cordaptive treatment.

James Brown : 4/29/2008 11:16:30 AM

Jeff has already commented on Valero (VLO) and its earnings report. The stock is now down about 3% and reversing under its trendline of resistance. Today's move is also a bearish engulfing (reversal) candlestick pattern. chart: Link

James Brown : 4/29/2008 11:10:28 AM

Seeing some cautious comments ahead of Garmin's (GRMN) earnings report, which is due out tomorrow morning. Wall Street expects a profit of $0.75/share.

Linda Piazza : 4/29/2008 11:07:48 AM

The SPX continues to attempt a steadying. The longer it does so without bouncing, the more the chance that it's burning off its short-term oversold status by that sideways movement and the next movement will be a down one. I still have not given up on warning bears to factor in a possible bounce attempt, however. If the SPX heads lower, the 30-minute chart provides a next downside target of 1380.98.

Analysis: Showing signs of stability and longer-term outperformance (68 in mid-January then 71 in late March). Near-term underperforming since earlier April (70 down to 68)

Robert Ogilvie : 4/29/2008 11:02:53 AM

May Gold down 12 at 877. Support at the April 1st low of 876.4

Jeff Bailey : 4/29/2008 10:59:59 AM

DJ (earlier)- ICSC-UBS CHAIN STORE SALES UP 0.9%

The International Council of Shopping Centers-UBS Retail Chain Store Sales Index increases by 0.9% for the week to April 26, following a 0.7% decline in the prior week and a 0.9% increase the week before that.

The VIX is now 20.52. It's closed two 15-minute periods above the resistance that was at 20.15 and now is 20.21, and appears to be about to close a third above it. It's broken to the upside above resistance that has held it back on multiple tests since 4/23. Barring a strong reversal back below that resistance, this is a significant short-term change. See my 9:55:37 post for a link to a VIX chart that shows the setup, if you haven't seen it already.

Keene Little : 4/29/2008 10:56:37 AM

It's obviously very early in the day but it should be interesting to see how the TRAN finishes the day. Right now the daily chart is sporting a nasty looking shooting star (tall shadow above a small red body) at resistance (its broken uptrend line from March 2003). If it were to finish this way I'd say we've got a heck of a reversal signal in the making: Link

As expected, the SPX attempts to steady. It hasn't yet been able to bounce, so it's time to mention the next potential target if this support fails. That's currently 1380.88. However, I wouldn't yet give up on the bounce attempt appearing soon.

James Brown : 4/29/2008 10:49:42 AM

The United States Oil Fund USO, the oil ETF, gapped down this morning and is trading near its rising 10-dma. Last week the USO bounced from its 10-dma. Maybe this week we'll finally see some of that overdue profit taking.

I was also noticing Mastercard (MA). The earnings pop higher stopped right at the weekly chart's trendline of resistance. Makes me wonder if MA is going to fill the gap before moving higher. chart: Link

Jane Fox : 4/29/2008 10:43:34 AM

SPX daily charts show how important the 1390-1400 resistance has become. Once it breaks this resistance (if it breaks this resistance that is) this market should be free to rally to 1500.

Remember though you need a CLOSE above resistance to give you a buy signal. Link

Profit for the second-largest card processor after Visa more than doubles in the 1Q to $446.9 million, or $3.38 a share, on gains from the sale of its investment in Brazil's Redecard and ending a customer contract. Shares gain 8%.

Shares of Under Armour (UA) are down 10.2% to $34.63 after reporting earnings this morning. The company beat estimates of 6 cents by 3 cents but essentially issued an earnings warning due to falling gross margins.

The NDX futures (NQ) is the only market to not break its overnight lows. Link

Jeff Bailey : 4/29/2008 10:36:27 AM

DJ (earlier)- OFFICE DEPOT PROFIT DROPS 55%

Retailer's 1Q earnings of $68.8 million, or 25c a share, as revenue slips 3.2% to $3.96 billion, hurt by weakness in Florida and California markets, while competitors continue to encroach on the retailer's territory. Shares rise 13%.

And there's the SPX right at the place that the 15-minute Keltner charts said it would go. Bears, be aware that as well as being a downside target, this zone is potentially strong support on 15-minute closes. Barring a strong whoosh that sends prices lower, I would expect an attempt to bounce here. The 9-ema is now 1393.57 and is still descending sharply, so a retest of that moving average may tell us something about strength versus weakness. If there's a steadying and then a bounce, bulls want 15-minute closes above that; bears want the opposite. Failures at the 15-minute 9-ema would turn any bounces into bounce attempts only.

On last night's SPX 60-min chart I showed the small rising wedge pattern from the April 22nd low and that it couldn't tolerate a break lower this morning. It has obviously broken lower and the pattern says we can expect a quick retracement to the start of the wedge--1371--before any appreciable bounce.

The bank reports a net loss of euro 131 million compared with a net profit of euro 2.12 billion a year earlier, ahead of a forecast net loss of €188 million. Separately, a survey shows Deutsche was the biggest market maker in forex in 2007 handling a fifth of all transactions.

Royal Dutch Shell and BP report impressive earnings in 1Q on the back of rocketing oil prices. Net profit at Shell climbs to $9.08 billion from $7.28 billion the year before, while BP records a jump of 63.4% to $7.62 billion, comfortably beating analyst forecasts. Shares in both companies jump over 4% in London, lifting the FTSE 100.

Genentech and Biogen Idec say a later-stage trial for using Rituxan, which is already on the market for non-Hodgkin's lymphoma and rheumatoid arthritis, as a treatment for lupus failed by every count. Both companies' shares fall 5% early.

Note: It would take a closing session measure of 30.00% for the NASDAQ 5-day NH/NL ratio to reverse back up.

Linda Piazza : 4/29/2008 10:20:08 AM

The SPX has now dropped to and slightly through the potential Keltner support on 15-minute closes at 1391.70. That support has been driven a little lower, to 1391.60, by the SPX's decline. The SPX is currently 1390.62. The next potential target is now 1388.62-1389.60, also potential support on 15-minute closes, and the SPX is fast approaching it. Bears should watch for a potential steadying here unless there's to be a strong whoosh through it (confirmed by a VIX breakout).

Linda Piazza : 4/29/2008 10:18:05 AM

The VIX is 20.12, breaking through that first level of Keltner resistance shown on the chart linked to my 9:55:37 post. The next level of potential resistance on 15-minute closes has now risen to 20.16. Bears need to be aware of this potential resistance, as a turnaround in the VIX could bounce equities, but bulls need to be aware that a sustained breakout in the VIX would be bearish for equities.

Jane Fox : 4/29/2008 10:07:39 AM

U.S. April consumer expectations 50.1 vs 49.4 in March

U.S. April consumer confidence above 61.0 expected

U.S. April consumer confidence 62.3 vs 65.9 in March

Linda Piazza : 4/29/2008 10:07:05 AM

The SPX approaches potential support on 30-minute closes now near 1391.78. The 15-minute chart suggests an even lower potential target, now near 1388.55-1389.50, but I'd certainly also watch for potential support near 1391.78.

Linda Piazza : 4/29/2008 10:00:38 AM

Subscriber Denise also notes that President Bush will be speaking on the economy this morning. I don't have the time.

Linda Piazza : 4/29/2008 9:59:20 AM

The SPX approaches but hasn't yet touched potential Keltner support at 1391.68 on 30-minute closes. This occurs as the VIX charges up to potentially significant resistance. If the VIX breaks through and maintains values above 20.15 (It's 19.97 as I type.), the chances that the SPX will touch that 1391.70 level or maybe even 1388.45-1399.50 level increase. If the VIX is strongly repelled. they decrease.

Jane Fox : 4/29/2008 9:58:34 AM

Remember Consumer Confidence out at 10:00ET

Linda Piazza : 4/29/2008 9:56:47 AM

A/D line -402.

Linda Piazza : 4/29/2008 9:55:37 AM

The VIX, at 19.93, is bouncing from that Keltner support I mentioned earlier, and now it's driving quickly toward next potentially strong Keltner resistance at 20.00-20.15. The SPX isn't falling far as the VIX drives toward this resistance, however. Bears need to watch carefully (as do bulls, of course) to see how the VIX manages that resistance. It's repelled the VIX each time it's been tested since 4/23, but that could change, of course, and would possibly be significant if it did. Here's a chart to show how powerful this has been over the last week: Link

Robert Ogilvie : 4/29/2008 9:55:03 AM

I am watching the CBOE $VIX very closely here. Yesterday one of my colleagues was pointing out the support at 19.17. The Index is up about 0.27 at 19.91. The 5 day RSI is also curling up and at 36.

Linda Piazza : 4/29/2008 9:51:53 AM

The A/D line has set a potential downside target near -1419. However, it's consolidating just below the current -166 level that benchmarks whether that target remains valid or not and it hasn't yet breached the 4/25 low of -660, so it fits with our other concerns. There's the possibility of a down day, but also the possibility of a choppy day in which signals are soon reversed and not dependable.

I don't see anything leaning to a strong bullish day yet, however. Most charts I'm watching still lean toward either an indecision-type day or an actual downturn.

Keene Little : 4/29/2008 9:51:24 AM

This morning I have to prepare for an afternoon meeting and therefore will only be able to make sporadic comments today. I then have to leave at 2:00 PM. I apologize in advance for being somewhat absent today but will be back with you tomorrow. I've got one eye on the charts so if something more than a choppy day starts to show up I should be able to make a few comments.

Linda Piazza : 4/29/2008 9:49:09 AM

Remember that one valid scenario for the day is that we could see another choppy indecision-type day, which would mean that indices head one direction but don't quite fulfill their targets (or maybe do) and then reverse and head another direction, with technical analysis all the while not proving as helpful as usual.

Linda Piazza : 4/29/2008 9:47:49 AM

The OEX has potential downside vulnerability to 642.56 and perhaps even 640.62-641.47. As with the SPX comments, this doesn't guarantee that these levels will be reached but traders should factor in that vulnerability in their trading plans.

Keene Little : 4/29/2008 9:47:05 AM

One more note on POT--the high on April 23rd did not have any negative divergence on the daily chart. That's not always a requirement but it offers nice confirmation when looking for a final high. The April high shows a higher MACD high vs. the February high and that helps confirm the 3rd wave high in April. A pullback followed by a new high would likely see a negative divergence against the April high and that would help confirm it as the 5th wave high.

Linda Piazza : 4/29/2008 9:46:14 AM

The SPX maintains vulnerabiity to support currently at 1391.77 and perhaps even to support now at 1388.23-1389.22. Doesn't mean it will necessarily be reached, but those are still valid potential targets and traders should factor in that vulnerability in their trading plans.

Linda Piazza : 4/29/2008 9:43:16 AM

Yesterday afternoon, I warned that the VIX was approaching Keltner support and might bounce. Now I warn that the VIX has potentially strong Keltner resistance on 15-minute closes at 20.00 and again at 20.15. The VIX opened higher and is now dropping, but it's dropping toward current support--19.59 and 19.69--that may stop its descent and then bounce it up into a test of that stronger resistance.

So, in case that's confusing, I see the VIX currently dropping toward possible support on 15-minute closes. If that support holds and the VIX is bounced, it's possible that this early bounce attempt in equities will fail as the VIX climbs toward 20.00-20.15. Then, equity bears would need to be watchful as it's possible the VIX could be stopped.

If the VIX doesn't find support near 19.59, then the next level to watch for potential support on 15-minute closes is 19.33, but that whole previous scenario would have to be revamped. For now, however, it's a valid possible scenario.

Keene Little : 4/29/2008 9:42:31 AM

I was asked for some more thoughts on Potash (POT) so I'll show a couple of things I'd watch for. Using the weekly chart with the log scale, like I showed yesterday, the uptrend line from July 2006 is currently near 140 which is also near the low in March. A break below that level would be confirmation of a top. Link

Even though this setup is a good sell signal (so far it's an evening star doji on the weekly chart at the top trend line) there's one thing that would bother me about looking for a longer term short play here--it looks like it needs a small pullback and then another new high. The move up from March should be a 5-wave move and right now it only looks like a 3. The current pullback could be the 4th wave and then we'll see a 5th wave up.

The daily chart shows the top trend line but this time using the arithmetic scale. Price broke above it this month and could find it to be support, currently just below near 185. Two equal legs down in its pullback is near 179. Any lower than 166, the February 26th high, would suggest we've already seen the high. But if I were playing this stock right now I'd be looking for support for another bounce back up to a new high. Link

Jane Fox : 4/29/2008 9:40:47 AM

AD line has improved to -116 and VIX to new daily lows so the bulls have taken control of the ball but do not have feild position.

Robert Ogilvie : 4/29/2008 9:37:41 AM

McDermott International (MDR)sees 1Q profit below analyst outlook.
For the quarter ended March 31, the company forecast profit between 50 cents and 54 cents per share.
Analysts polled by Thomson Financial expect profit of 69 cents per share.
The company also forecast revenue between $1.42 billion and $1.46 billion. Analysts expect revenue of $1.59 billion.
The stock is down over $4/share at $55.54.

Linda Piazza : 4/29/2008 9:36:51 AM

Keltner outlook on the A/D line: The A/D line dropped straight to potential support on 15-minute closes, at -154. In fact, the A/D line is currently a little below that level, at -264 as I type, but the first 15-minute period is far from concluded yet, of course. However, it has also dropped below an ascending trendline off the 4/24 low. If the A/D line can't make it back above that -154 level by the end of this first 15-minute period and particularly if it's dropped below the 4/25 low of -660, it may be setting a downside target near -1413. For now, however, we have to consider the possibility that it's at support and may cling to it.

Jane Fox : 4/29/2008 9:35:12 AM

I suspect today and tomorrow morning's range to be very narrow.

Jane Fox : 4/29/2008 9:33:58 AM

AD line opens at a netural to bearish -293.

Linda Piazza : 4/29/2008 9:29:34 AM

Shortly before yesterday's close, I mentioned that the SPX was forming a doji at the top of the climb off March's low. That could be a potential reversal signal, as I mentioned then. We've seen some such signals confirmed, sending prices down through a rising price channel that's now narrowing. This should also be put into the context of a weekly candle for last week that was a small-bodied candle, itself a potential reversal signal. Not all such signals are confirmed, however.

Futures are currently below fair value. If the SPX heads down this morning, that action makes a confirmation of the reversal signal more likely but it doesn't promise that a confirmation will be produced. It's not itself a confirmation. That's particularly true since it's sometimes normal for prices to clamp down prior to a Fed decision, especially ahead of other important data tomorrow morning.

So, if the SPX heads lower this morning, consider the possibility that a reversal signal will be confirmed by a down day (a reversal signal that could be reversed again tomorrow, depending on what's said and done), but also factor in a possible scenario that includes another choppy trading day that produces some kind of candle indicative of indecision.

Specificially, however, if the SPX spends much time below yesterday's close and particularly below yesterday's 1394.82 low, it may be headed toward next support on 30-minute closes at 1391.73 (as of yesterday's close). A test of 1388.50-1389.50 can't be ruled out, either, as the SPX verged on setting a downside target there at the close yesterday.

Keene Little : 4/29/2008 9:20:42 AM

Overnight price action was negative but it looks like more of a drift lower instead of any kind of concerted effort to sell off. We have the setup for a continuation of selling today but as always, until these rising wedges break, watch out of for the chop and whipsaw. This is especially true until we get through FOMC tomorrow.

Jane Fox : 4/29/2008 9:17:13 AM

Here are your overnight charts. It looks like the Russell 2000 futures (ER2) is you stronger market but that is because it closed stronger. Both the NDX and S&P futures (NQ and ES) have tagged their respective previous day lows and the DOW futures (YM) has even broken its PDL. Link

Jane Fox : 4/29/2008 9:13:14 AM

WASHINGTON (MarketWatch) - The decline in U.S. home prices quickened in February, with prices down a record 12.7% in the past year for 20 key cities, according to the Case-Shiller home price index released Tuesday by Standard & Poor's. "There is no sign of a bottom in the numbers," said David M. Blitzer, chairman of the index committee at Standard & Poor's. Prices in 19 of the 20 cities have fallen over the past year, with prices in all 20 cities falling month-to-month for six straight months. The biggest declines were in Las Vegas and Miami, with declines of more than 20% in the past year. Prices in Charlotte, N.C., are up 1.5%.

Jane Fox : 4/29/2008 9:08:26 AM

Home prices down in 19 of 20 cities vs. year ago: S&P

Feb. Case-Shiller home prices down 12.7% in past year

Jane Fox : 4/29/2008 8:59:55 AM

LONDON (MarketWatch) -- BP and Royal Dutch Shell on Tuesday both beat analyst estimates by about $1 billion after big first-quarter-profit rises, as a nearly 70% rise in crude-oil prices helped offset virtually flat production and skyrocketing costs at the European oil giants.

BP's earnings rose to $7.62 billion from $4.66 billion. Adjusted for the impact of energy-price changes on unsold inventory and other charges and BP would have earned $6.49 billion, trumping analyst estimates by over $1 billion.

Royal Dutch Shell's profit rose to $9.08 billion from $7.28 billion. Adjusted for the impact of energy-price changes on unsold inventory and $77 million in charges, and Shell earned $7.7 billion, up 5% from a year earlier and above the $6.77 billion that analysts polled by Shell had forecast.

In both cases, production growth stalled during the quarter - basically unchanged for BP at 3.91 million barrels of oil equivalent a day, vs. a 1% rise to 3.44 million barrels for Shell

Jane Fox : 4/29/2008 8:58:23 AM

RealtyTrac: Foreclosures surged 23% during the first quarter and 112% in the last year. So finds the latest survey from RealtyTrac. Rick Sharga at the real estate data firm tells says 90% of major cities saw increased foreclosure activity during the first quarter - with cities in California and Florida leading the way.